Sharing Economy has Strong CSR Potential

The debate around the sharing economy is mounting, with increasing pressure on governments to impose regulations while consumers avidly embrace the services on offer. But how does it measure up in terms of corporate social responsibility? Journalist Ellie Cooper investigates.

International services such as Uber and Airbnb have taken off in Australia and, along with a host strong local businesses, they have caused significant disruption to the traditional economy.

The goods and services available are growing quickly and include car sharing, ride sharing, accommodation, second-hand goods, and personal and employment services.

Managing Director of the Australian Centre for Corporate Social Responsibility, Dr Leeora Black, said that, while it’s early days, the industry has strong CSR potential, particularly in terms of environmental impact.

“The sharing economy as a concept is very attractive from the perspective of corporate social responsibility and sustainability,” Dr Black said.

“It’s a very disruptive business model that invariably relies on advanced technology for its implementation.

“Although there are a few different models within the sharing economy, what they seem to have in common is the promise… of reducing environmental impacts through reliance on technology, and the big focus within the sharing economy on reusing and recycling and sharing.”

She said there is also the potential for positive social impact.

“Their success relies on a high level of trust between participants in the sharing economy and a high level of transparency that engenders that trust,” she said.

“So there’s the promise, broadly speaking, of increased social capital in communities and societies as a result of this, where people learn to trust complete strangers through the level of transparency and the reliability of the technology platforms.

“So there’s a lot of promise with these business models of something that really is very sympathetic to the values and the thinking of CSR and sustainability.”

GoGet is Australia’s first professional car sharing service, operating in Adelaide, Brisbane, Melbourne and Sydney.

GoGet Head of Communications Jonathan Englert said corporate social responsibility was at the core of business operations and, as Black said, this centres on environmental benefit.

“The environment is essentially built into our business model, for every GoGet car share vehicle used potentially 12 cars are taken off the road,” Englert said.

“But we also deliver community congestion benefits because every vehicle used we’re getting maybe 12 people in the community who are choosing not to buy a car and park it in the streets.

“We don’t actively say ‘we’re going to do corporate social responsibility here or there’ we basically do it everyday.”

However, Black said that the nature of the sharing economy also poses risks.

“On the other hand, all of these organisations are organisations that need to think very carefully, like any organisation would, about their social and environmental impacts,” she said.

“They are potentially vulnerable to some social and environmental risks, apart from the economic risks that accompany all new disruptive business models.”

She said the environmental risks are mostly limited to greenwashing, but the potential social costs could be significant.

“On the environmental side I think it’s the risk of not living up to the promise basically of reducing negative environmental footprints,” she said.

“We really don’t know at this stage the extent to which some of the claims new companies in the sharing economy are really making a difference, although it definitely looks promising.

“But on the social side there are a number of risks, one of those is labour exploitation, I’m not saying it happens or happens all the time, but there’s the potential for that.

“People are participating often as individual contractors and taking all of the risk of employment on themselves, so they have the risks the same as a contractor would have in the traditional economy but perhaps even more so because there’s not a clear regulatory regime around the sharing economy.”

Last month the NSW Government released a framework for regulating the sharing economy in response to its growth. The position paper said the industry contributed $504 million to the state’s economy last year alone.

Minister for Innovation, Victor Dominello, said international experience showed that where governments had embraced the sharing economy and adopted regulation, it had provided a significant boost for local startups, social enterprises and entrepreneurs.

Englert said that as GoGet grew it began collaborating successfully with local governments.

“We’ve grown so much, we have 80,000 members now and 2,100 vehicles, and we started in 2003 with three vehicles and 12 neighbours,” he said.

“As we grow that benefit continues to scale, so you have larger environmental benefits, larger community benefits, and the benefits are now being recognised by cities and governments.

“The NSW government has done a fleet trial with us because they wanted to cut costs and share efficiencies. The City of Melbourne has launched a really ambitious target for car share for almost 20 per cent of all residents to be car share members by 2021, so it’s seen as an important public transport benefit.”

But Black said that in terms of legislated regulation, the sharing economy posed difficulties.

“Because it’s so international, we don’t have the regulatory ability yet in this area the way we do in the traditional economy,” she said.

Ride-sharing service Uber remains one of the most contentious companies in the industry.

This week Sex Party MP Fiona Patten announced that she would introduce a private member’s bill in the Victorian Upper House to regulate Uber. The Victorian Opposition has also called for action, but the Andrews Government said it would not rush on regulation.

The ACT was first to legalise Uber in August last year, followed by NSW last December, and Western Australia and Tasmania are expected to follow. Queensland is currently conducting a review into the industry.

However, Black said that regulating one company in the sharing economy was insufficient.

“There’s been some attempts, for example with Uber, but I think legislation or regulation that’s designed to deal with the particularities of one company is probably not going to be adequate,” she said.

”It’s the whole business model and the whole new style of economy that needs to be considered for regulation.”

She also said that there are a number of other potential social costs associated with the lack of regulation.

“They’re potentially outside the existing tax framework as well. Now we wouldn’t tolerate avoidance of regulation and tax form a traditional company, so we should not tolerate it from these new sharing companies either,” she said.

“Associated with that, with their business model could be potential issues of quality control and that brings risks then to consumers, as well as to the participants, the providers of labour or shared goods, but particularly to the consumers of the services.”

Englert said GoGet is immune to many of the social risks because the company owns the fleet of vehicles, in contrast to peer-to-peer services like Uber and Airbnb.

“GoGet is based on sharing but we own the vehicles and, in many respects we have structures built around protecting the consumer,” he said

“We’re not a peer-to-peer service, we’re not a platform connecting participants, so we do have responsibility and we do take responsibility for the experience of our members and for the wider community. We have new vehicles, the average age of our fleet is less than two years.”

But even in regards to the wider sharing economy, Englert questioned whether regulation was the answer.

“I don’t know if it’s a question of more regulation. This is probably the biggest thing about the sharing economy, we’re in a process of education,” he said.

“GoGet is a good example, we’re still telling the story of what GoGet does and people are still being surprised by it. I guess we’re still in early states.

“If you look at any industry or any new sector there’s always a process of maturation that comes along and that I think is what’s happening with the sharing economy.

“There’s probably some rough edges that will be smoothed out over time, but I think the models, whether it’s us, or peer-to-peer, have been proven to have something good there.”

However, he said that because the industry is still burgeoning it’s difficult to measure the true impact.

“We don’t necessarily have massive resources to do huge longitudinal studies, and car share is still enough in it’s infancy that you don’t have an established research industry around it,” he said.

“Our core measurements come from pivotal car share studies. The City of Sydney did a car share study which came up with a 19.4 cost to benefit for car share.

“One commissioned by the City of Melbourne… estimated that the city could expect to reap $45 million in net benefits, many related to community health and environment if they continued on their plan to expand car share in Melbourne to 2,000 vehicles, which they’re on track to do by 2021.”

GoGet currently relies on the data from their users to measure the company’s impact.

“The average car is going to be used by about 22 to 24 people in the community, and half of those people report that if GoGet didn’t exist they would have bought a car and parked it on the street,” he said.

“So based on that plus our membership numbers, we’ve estimated that we’ve probably parking in communities upwards of 50 kilometers of a single lane of traffic.”

Leeora Black also said that more exploration of the industry was needed to ensure its potential is maximised, while negating the risks.

“These are just the top of my potential positive and negative impacts, I think it’s a very exciting new way of working, a very exciting new economy,” she said.

“But we do need to think very carefully about how we’re going to make sure these disruptive new business models have a genuine positive social impact and a genuine reduction in negative environmental impacts, and they really contribute in a fulsome way to the betterment of society and economy.”